Law Line - Consumer

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Debt Collection Harassment

West Virginia has a law called the Consumer Credit Protection Act. In general, this law says that debt collectors cannot intentionally annoy you, harass you, oppress you, or abuse you.

What does this mean in practical terms?

No continuously repeated telephone calls. They can’t call you more than 30 times a week or engage in a telephone conversation more than 10 times a week.

No phone calls in the middle of the night, or way early in the morning.

No threats of violence or physical harm if you don’t pay up.

No threats to have you arrested.

No threats to ruin your reputation.

No unreasonable tactics to coerce or scare you into paying.

If creditors do these things, you can sue them. You will need strong evidence that the debt collector violated the law. If you win the case, the creditor will have to pay you. The abusive creditor will have to pay you a financial penalty, and also pay for any harm they caused.

Debt collectors do have legal steps they can take. Creditors can report your non-payment on your credit record. Creditors can sue you. If they win the court collection case, creditors can garnish your wages, or take money from bank accounts. If they win the case they can place liens on your property. But you cannot be arrested or put in jail for not paying debts, even after a court case. And you may have rights under West Virginia law to protect some of your income or property even against legal debt collection methods.

An attorney may be able to help you stop harassing telephone calls. An attorney can advise you about the evidence needed to win a suit against debt collectors.

Sued for a Debt

Suppose a creditor sues you in court. All this really means is that they are asking a judge to decide two things. One, do you actually owe the creditor a debt? Two, what is the exact amount that is owed?

There are several steps in this kind of court case. First, you must receive a “summons” formally notifying you that the case has been filed. The papers will include a copy of the creditor’s claim describing why they think you owe them money, and how much they think you owe.

You then have up to 20 days to file a response or “answer” to the creditor’s claim. File your response with the court, and send a copy to the creditor. After the 20 days, if you haven’t filed an answer you can lose just because you did not dispute the claim.

Sometimes people know they owe a debt, but don’t know the exact amount. It’s perfectly okay to send in a response that says “I agree that I owe the debt, but I don’t know the amount.” This means the creditor will have to prove the exact dollar amount that is owed.

After you file a response the court will schedule a hearing. You will get a notice telling you the time and date. Especially if you believe you do not owe the debt, or do not owe the amount the creditor is claiming, you have to go to the hearing. The hearing is the only legal opportunity you have to prove the creditor is wrong. Take your receipts, payment records, checks, or whatever proof of payment you have. Be ready to explain to the judge why you do not owe what the creditor is claiming.

If the creditor wins the case, the court will enter a “judgment order” against you. This order will state the exact amount that you owe. With a judgment order, the creditor can then take additional court steps to garnish wages or attach bank accounts. But you cannot ever be arrested or put in jail for failing to pay an ordinary consumer debt. No judge can send you to jail for not paying an ordinary consumer debt.

If you get sued, talking to a lawyer is almost always helpful.

Don’t forget to file an answer on time, even if you’re still waiting to talk to a lawyer. You can always file a revised answer later. Make sure you file something, even if your answer just says “I disagree with this claim.” If you don’t file anything at all, a judgment can be entered against you without a hearing or trial.

Court Judgments for Money Owed

Suppose someone believes you owe them money on a debt. For example, an unpaid loan or credit card, or back rent. They sue you. They prove in court that you do owe the money. The court will issue what is called a “judgment.” This is a court order stating exactly what you owe.

The court judgment gives the creditor several options. Once the creditor gets a judgment, the creditor can go back to court for “enforcement” of the court judgment.

There are several limits on the judgment enforcement tools. If you are a head of household, you may be able to protect some of your income or property from collection. Also, creditors cannot take money you get from Social Security, pensions, alimony or child support. Most important of all, you cannot be arrested or put in jail for not paying on a judgment.

The creditor must notify you when it files court papers to use any of these tools. You then have the right to ask for the protections and limits so you and your family have enough money to survive.

If a court judgment is issued against you, you should talk to an attorney to learn about your rights and protections.

Protecting wages from debt collection

You were sued for a debt. The court ruled that you owe the money. A “judgment” was issued. Now the creditor wants to garnish your wages.

To do that, the creditor must go back to the court and show you have not paid the judgment. The creditor must also tell the court how much money you are paid at your job. The court will then issue a garnishment order to your employer. This order will tell the employer how much to deduct from your paycheck.

The first thing to understand is that the law does not permit any garnishment if your wages are below a certain “protected amount.”

What is the “protected amount”? It’s fifty times the federal minimum wage. Whenever the federal minimum wage is changed, the protected amount changes.

Using the current federal minimum wage, the protected amount is $362.50. If your after-tax wages are below this amount, nothing can be taken.

The term “after tax” is important. The garnishment applies only to your wages after legally required deductions are taken out. “Legally required” means things like taxes and Social Security. Deductions that are not required by law, such as Christmas Club or savings plans or health insurance, can be counted against your protected amount.

If your net pay after taxes is $362.50 per week or less, the garnishment will fail. No money can be taken from your paycheck.

If your net after-tax paycheck is more than $362.50 a week, some money can be taken. But there is an upper limit as well. The most that can ever be taken is twenty percent of your after-tax pay.

In the end, there are two protections. First, you must always be left with at least $362.50 per week. Second, if you have more than that the creditor cannot take more than twenty percent.

This protection covers anyone residing in West Virginia. You don’t have to be a parent, or a senior citizen, or a person with a disability.

This is designed to be an automatic process. You don’t have to file legal papers with the court to ask for this protection.

However, mistakes sometimes happen. Occasionally the court may make a mistake and tells the employer to take out too much. If that happens, file a written request with the court clerk asking the judge to correct the error. Attach copies of your previous pay stubs. This will show how much you earn, and whether your after-tax earnings are below the protected amount of $362.50 a week.

For more information about protecting wages from garnishment read this article.

Protecting property from debt collection

You were sued for a debt. The court ruled that you owe the money. A “judgment” was issued. Now the creditor wants to take money from your bank account, or have some of your things sold. There are limits to what the creditor can do.

First, let’s talk about the creditor who tries to take money from your bank account. There are three protections.

First, creditors cannot take money from retirement accounts like an IRA or a 401k.

Second, private creditors cannot take money that you can prove came from Social Security or SSI.

Third, you can protect up to $1,000 in a checking or savings accounts.

To get these protections you must file a form with the court. When the creditor asks to seize money from your bank account, you’ll be notified. When that happens go to the court clerk. Ask for the “personal property exemption” form.

The exemption forms are long and complicated. To help you fill them out, Legal Aid has a step-by-step explanation for filling out the exemption forms. Go to www.lawv.net and search for “Personal Property Exemptions.”

Next, let’s talk about when the creditor asks the sheriff to take and sell some of your things. For example, a car, furniture, tools, or guns. The law provides protections of different amounts for different types of property. You can protect up to $5,000 equity value in one vehicle. You can protect up to $8,000 in re-sale value of household goods, appliances, or clothing.

When the creditor starts to use a legal debt collection procedure, you will be notified. Again, to seek these protections, you must respond immediately. Go to the court clerk’s office to get the exemption form. You can also download it from the Supreme Court web site. Fill out the “exemption form” listing your property, and file it with the court clerk. You must list EVERYTHING you own. If you try to hide anything, you can get in trouble.

What if you own more than the protected limits? Identify on the form which items you want to protect, that are under the limit. Other items above the limit will be exposed to collection.

What if you have a single item worth more than the limit, like a car worth more than $5,000? That item can be sold. The protected $5,000 will be given to you. Any money from the sale above the protected amount will be given to the creditor.

How do you determine the value of your stuff? The value is what you could get if you sold that item today, in its current condition. It’s a used item, not new. Think yard sale pricing.

For more information about protecting personal property from collection read this article.

Bankruptcy

Bankruptcy is a legal proceeding for people who owe more debts than they can pay. A bankruptcy may get rid of your bills, so you can get a “fresh financial start.” Or a bankruptcy may re-organize your bills and your payments, so you can catch up and pay them over time. Whether or not filing for bankruptcy is in your best interest depends on many factors and your individual situation. Bankruptcy can be the right choice if you have no better way to deal with your debts.

When you file bankruptcy, all of your creditors must immediately stop trying to collect debts from you. Then the bankruptcy court will sort out what is to be paid, and when, and how. Bankruptcy may:

Stop a foreclosure on your house or mobile home,

eliminate the legal obligation to pay most or all of your debts ( this is called a “discharge”),

prevent repossession of your car,

stop wage garnishment and other collection activities, and

restore service or prevent utility shut off.

However, bankruptcy does not fix every financial problem.

Some debts cannot be discharged in bankruptcy. These include child support, spousal support, student loans, criminal fines or restitution orders, and some tax debts. In addition, while bankruptcy may stop foreclosure or repossession, you will have to pay these debts over time if you want to keep your home or car.

Bankruptcy is a complicated legal proceeding with lots of rules and papers. We can’t easily explain Bankruptcy in this short message. If you are considering bankruptcy you should get legal help. Many attorneys who practice bankruptcy will give you a free initial consultations. Legal Aid also offers bankruptcy clinics to eligible low income individuals to help them fill out the paperwork to be able to file bankruptcy on their own.

Problems with public utilities

Suppose you’ve got a problem with a utility company. Maybe the phone company, the gas company, or the electric company. You think you’re being treated unfairly, or you have a dispute about the bills. Maybe the company says you owe an old bill, but you don’t agree. The West Virginia Public Service Commission, or “PSC,” regulates utility companies in West Virginia. The PSC also handles complaints and disputes about utility companies. If you have a problem you may want to file a complaint with the PSC.

BUT, before filing a complaint contact the utility company first. Let the company know what your problem is. Give the company the information they ask for. The company will look at your issue and tell you what they are willing to do. For example, suppose your problem is that you just can’t pay the full amount of your utility bills. Try to work with your utility company to set up a payment plan you can handle. If talking to the company doesn’t solve the problem, then you may want to file a complaint with the PSC.

There are two types of complaints you can file with the PSC. The easier option is an “informal” complaint. To do this, you can call the PSC at 1-800-642-8544. Or you fill out a complaint form online at the PSC web site. Or you can mail a written informal complaint letter to the PSC. Someone from the PSC will contact you and the utility company and try to work out a solution to your problem. The PSC tries to deal with informal complaints pretty quickly, typically within 30 days.

If the informal complaint doesn’t solve your problem, then you can file a formal complaint. This is a more detailed and complicated process. It may involve PSC attorneys and engineers and a hearing before an Administrative Law Judge. There is a specific form to complete to file a formal complaint. You can go to psc.state.wv.us to print the form or call 1-800-642-8544 to ask for a formal complaint form to be mailed to you.

IF YOUR UTILITIES ARE GOING TO BE CUT OFF and you can’t work it out with the company, make sure you file your complaint BEFORE the cut off. The PSC has more options if service is still on. This may mean that you get to keep your utilities connected, while the PSC tries to deal with your complaint.

Financial Exploitation

“Financial exploitation” happens when someone illegally uses your money or property for his own benefit. The misuse is often committed by a person you trust like a family member, friend or caregiver.

Examples of ‘financial exploitation’ include:

Taking money or other items from your home or bank account

Selling or transferring your property without your knowledge, or against your wishes

Using your credit cards without permission

Using your name to open new credit cards

Refusing to return borrowed money or property, or

Changing your will, trusts, living trusts, or inheritance for their benefit

Who is at risk of financial exploitation?

Senior citizens

people whose finances were handled by a spouse who has died;

people who may be lonely;

people who live in long-term care settings;

people with all types of disabilities, and

people who have a hard time understanding financial issues.

Here are warning signs of Financial Exploitation:

a lot of new account withdrawals;

a lot of new charges on your credit card;

confusion about recent financial arrangements;

Changes in property titles, deeds, or refinanced mortgages; and

changes in Power of Attorney documents, wills, or trusts

If you believe that your bank account or credit cards have been used without your permission, call your bank and credit card company immediately. Financial Exploitation is a crime. You can contact Local or State law enforcement to file a report.

You can also contact Legal Aid of West Virginia to see if you are eligible for free civil legal help. Or call the Attorney General’s Consumer Protection Hotline at 1-800-368-8808, which gives advice to victims of fraud, scams and identity theft.

Car Repossessions

If you don’t pay on a car loan, the creditor can legally take the car from you. Before your car is repossessed the creditor must do a few things, required by law.

First, after you are late making a payment the creditor must send you a “ten-day notice. ” The notice must tell you, in writing:

the amount you owe,

the amount of any late fees, AND

if you do not pay in ten days, your car could be repossessed.

The creditor then must wait at least ten days. If you catch up your payments and late fees during the ten days, then the creditor cannot repossess your car. If you don’t, the creditor can repossess your car at any time, without giving you more notice.

Second, a creditor cannot "breach the peace" during the repossession. This applies to the creditor or a repo man. They may have a legal right to take your car. But this does not mean they can use physical force against you to push you out of the way and get your car. The repo man cannot make threats to harm you if you don’t give up the car. The repo man cannot break a lock to get into the garage to take your car.

What happens after repossession? After repossession, a creditor can decide to keep it as full payment of the debt, or resell it. A creditor must tell you in writing if he wants to keep your property as full payment. If you disagree, you can demand that your property be sold.

Most creditors prefer to sell your property. The creditor must send you a written notice of the sale. This notice must tell you that the money from the sale will reduce the amount you owe.

If the creditor gets less money than you owe, then you will still owe the difference.
If the creditor gets more money than you owe, then you will get the extra money.

Can I get my car back after it has been repossessed? West Virginia residents have the right to buy back ("redeem") a repossessed vehicle. You must do this before the car is sold to someone else.

To redeem the car, you must pay the entire amount due on the car loan. This may also include any reasonable fees related to the repossession, such as storage costs and attorney's fees.

If you had any other belongings in your car when it was repossessed, a creditor must return it to you. But, improvements and additions to the car like a stereo or luggage rack become part of the car. The creditor can keep those and sell it with the car.